OSK Investment Bank Bhd will bring its expertise in the regional investment banking business and small and mid-cap companies in a merger with RHB Banking Group.
Contrary to some views the proposed merger was an overlapping one, the merged entity would be synergistic, OSK Investment Bank Bhd CEO and executive director U Chen Hock said.
He added that OSK Investment Bank has about 3,500 employees in its investment banking business across Malaysia, Indonesia, Thailand, Singapore, Cambodia and Hong Kong with representative offices in China.
U: ‘OSK will be able to provide small and medium cap investment banking advisory services to RHB.’
RHB has more than 700 employees in its investment banking business. Analysts said the merged entity would be one of the top three investment banking groups in Malaysia.
U said investment banking is a talent-driven business and with a strong pool of talent, it will definitely be good for the merged entity.
“The merger will also add value to the enlarged entity as OSK Investment Bank will be able to provide small and medium cap investment banking advisory services to RHB's current big cap business.
“It will also allow RHB with the proposed merger to tap the Singapore investment banking scene which is tightly regulated and not an easy one to penetrate,” U told StarBiz.
OSK Investment Bank is the fourth largest retail broker in the country (with a 6.7% market share) and RHB Cap is the third largest, making the merged entity the top stockbroker in Malaysia.
In Singapore, via OSK DMG, the group has the largest security broking business.
After combining OSK's market share with RHB Cap's 7%, the merged entity would overtake CIMB Securities which is currently leading with a market share of 10.5%.
In terms of research, OSK Investment Bank has more than 50 staff covering about 400 stocks in the region and this would definitely be synergistic to RHB.
At present, investment banking contributes about 50% to OSK Holdings group's earnings compared with slightly less than 30% from stockbroking.
Some analysts believe the proposed merger with RHB would help OSK tap into the former's commercial banking business in the country and in the region and would generate bigger commercial banking deals for the enlarged group.
U reiterated that at this stage, both organisations were still awaiting Bank Negara's approval to commence negotiations on the proposed merger.
Last Thursday, RHB Capital Bhd and OSK Holdings Bhd submitted their applications to the central bank to begin talks on a possible merger.
OSK was speculated to be one of the possible candidates for a merger with RHB Cap earlier this year but this was overshadowed by Malayan Banking Bhd and CIMB Group Holdings Bhd.
Maybank and CIMB backed off due to pricing issues, and speculation that a merger might be in the works had not subsided, especially after it was reported that Aabar was considering a writedown of the US$1.9bil (RM5.7bil) it paid for RHB Cap, in the hopes of spurring another round of merger talks.
ADCB signed the sale and purchase agreement to sell the block of shares to Aabar on June 18.
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